HK geared for garment extravaganza
More than 1,490 exhibitors from around the globe will be at this year's Hong Kong Fashion Week for Fall/Winter 2008, underlining the city's importance as a hub for the clothing industry.
The exhibition will run from today until Thursday at the Hong Kong Convention and Exhibition Centre, concurrently with the brand-name-oriented fair World Boutique, Hong Kong. Both fairs are organised by the Hong Kong Trade Development Council.
One of the advantages Hong Kong has is its proximity to mainland China, which is appropriately referred to as the world's factory. Despite pressure from rising operational costs and wages that are threatening its competitiveness in manufacturing, the country's textile industry output for 2007 may reach 3.05 trillion yuan, according to a report by the Textile Industry Association cited by Xinhua News Agency last month.
More than 600 exhibitors at Fashion Week are listed as mainland based.
But besides the mainland's strength in garment manufacturing, intellectual property rights is also likely to be a topic among the Fashion Week exhibitors, one of which is Diane Freis Boutiques (HK).
Every time she visits the mainland, American fashion designer Diane Freis feels she has unearthed an Aladdin's cave of treasures, with warehouses of beads, yards of fine fabrics and a kaleidoscope of colours.
'[The mainland] has just about everything you can imagine, and it's good and bad at the same time. There really is an oversupply of information. You want to see it all, but it is just so overwhelming and is more than I can digest,' said Freis who made her name designing colourful one-size polyester dresses several decades ago.
But despite the plethora of materials available, and the mainland's reputation for production, garment manufacturers partnering with mainland factories continue to be plagued by one perennial problem: the fear that their intellectual property rights may be violated.
'In [the mainland], where things are changing constantly, you have to be careful about who you trust,' said Freis. 'I try and protect my designs by entering into semi-exclusive deals with the factories, so I am working with factories that don't have many other accounts at the same time.'
I am worried about the issue of intellectual property but you can't become too paranoid to the point that it hinders you from doing business. This is an industry-wide problem,' she added. Her company has exhibited at Fashion Week regularly over the past few decades, and she said she'd had 'a fair share of luck' in meeting new clients through the fair.
Headquartered in Hong Kong, the company runs two boutiques in Hong Kong, an outlet on the Gold Coast of Australia and a franchise boutique in Saudi Arabia. It also has distributors around the world.
Fashion house Aftershock run by husband-and-wife team Hiro and Radhika Harjani, manufactures its collections out of India because of the country's expertise in beading, and says the copyright issue can be better managed there.
'Though there is also the temptation of copying designs in India, the problem is not as serious as in [the mainland]. Because the infrastructure is not as good as [the mainland's] we have to be in closer proximity to the supply position and are more vigilant in monitoring the factories we work with,' said Dayal Harjani, chairman and managing director of Aftershock Hong Kong.
With a growing number of Hong Kong garment manufacturers now designing their own labels in order to hone their competitive edge in an industry that has traditionally competed primarily on pricing, the issue of intellectual property has become a more pertinent issue than ever before.
This comes amid rising labour and operating costs, and the appreciation of the renminbi, boosting overall production expenditure in the Pearl River Delta by 20 to 30 per cent in the past two years, said Daniel Poon Wing-choi, the Trade Development Council's assistant chief economist.
'To avoid the intense cost competition, Hong Kong companies will need to provide more value-added services, including producing more of their own designs and brand-name labels,' he added.
Competition in the near term is expected to intensify before it eases, given that the market has already shown signs of a slowdown in the past year. 'We have seen slowing demand in overseas markets, particularly the US, where the subprime problems have slowed orders and affected market performance,' Mr Poon added.
For the first 11 months of last year, Hong Kong's total garment exports saw a growth of only 1.8 per cent to reach HK$205 billion versus 3.9 per cent in 2006 and 8.6 per cent in 2005.
'Mainland Chinese companies have been undercutting us on prices and this has only become more serious in recent years. With the abolition of the quota systems, the road ahead is expected to become rougher as our Chinese competitors get more business and compete more directly with us,' said Andy Lee Chun-fai, executive director at garment manufacturer M.R. Simak.
The European Union lifted its garment quota system on [the mainland] at the beginning of this year with the US expected to follow by the end of the year.
Though designing own-branded apparel may be the answer to a sustainable business strategy for the long term, small and medium-sized manufacturers will be the first to admit that such a model is far from easy to adopt.
'It is particularly hard to start designing and producing your own brand if you have been running an OEM business and have no branding and design experience,' said Anthony Keung Ping-so, managing director of the Fenix Group.
Mr Keung is an industry pioneer, who, having caught on to the importance of brand development early, launched his own label Anteprima over a decade ago. The brand now has 50 shops in Hong Kong, Japan, Taiwan, Singapore and Milan with aggressive expansion plans for [the mainland]'s first- and second-tier cities. 'The OEM strategy is a rather short-term business. It may get you quick returns, but it is really about receiving, processing and delivering orders. There is not much potential in it,' he noted. 'In contrast, having your own brand is a long-term commitment. It may take five, six years to develop, which is why Hong Kong companies with their own brands are in the minority.'
M.R. Simak is one of the few brands which has taken that step. Over the past two years it has launched two of its own labels for children and women.
'Our long-term goal is to build up our own brands so it can be a secure business we can rely on. We want to make this focus our bread and butter,' he said.
Mirage Fashion, which also has its own brand, understands that offering a broader range of services is no longer an option; it is a necessity.
'Customers are now willing to pay for more. They aren't just focused on manufacturing. They are also keen to see new ideas and services,' explained Alexandra Suen, a sales manager at the company.
'You can't just be the runaround supplier sourcing, manufacturing and showing products anymore,' said Derek Lazarus, managing director of Globex Design, which manufactures and designs brands and private labels. 'You need to add value by showing high quality, good designs and respond quickly because a lot of companies are now going directly to factories in [the mainland] themselves.' TDC has on-the-spot procedures at the fairs for handling complaints about products on display that allegedly infringe intellectual property rights.